Nordstrom Is Killing It


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By Becca LipmanNordstrom (JWN) knows customer service like nobody else knows customer service. Pleasing their customer is their mantra, going above and beyond at any measures is the norm, profit margins be dammed if it helps get the job done.

Yet with that kind of mentality, Nordstrom’s profit margins are far from suffering.

While other chain department stores like Macy’s (M), Neiman Marcus and Saks (SKS) all took a hit in the recession and recent market, none grew market share in 2010 like Nordstrom. “Last year revenue at the company grew 12 per cent, to a record $9.7 billion.” (via Business Week)

The company’s unique approach to sales and customer services has made a mark in the retail industry, marks that other chain stores continually seek to emulate. For one thing, the company has a unique way of setting up their store. Unlike other retail chains Nordstrom divides sections into “so-called lifestyle sections” instead of by brands. It makes putting an outfit together easier, and sales reflect that.

Another unique aspect of Nordstrom is the extent to which their already overly helpful sales assistants are prepared to shower customers with convenience and selection. Providing salespeople with quick and easy electronic access to the chain’s entire inventory along with guaranteed quick delivery to customers ensures a significant sales increase without increasing any actual inventory. Other chain stores, even those that have similar capabilities, are having trouble emulating that success.

The department store generally sells high-end brands. Miraculously, during the recession when all other chain department stores rushed to give store-wide discounts the company’s leaders – the four Nordstrom brothers and fourth generation family owners – decided not to cut prices. “Instead the Nordstroms decided to temporarily layer in cheaper merchandise and open fewer stores than usual.”

Their sales and selection have also made their mark into the American psyche. Store openings in posh neighborhoods across the USA have been putting women in a buying frenzy. The chain has 116 stores to date and current plans to open 11 more Nordstrom and Nordstrom Rack locations before year’s end as well as nine more in 2012.

The appeal of Nordstrom extends to merchandisers as well. To quote Business Week, “Brands covet an invitation to win shelf space. Shoe entrepreneur Steve Madden recalls the first time he was asked to a Nordstrom buyer’s meeting. “It was like an invite to the White House,” he says.”

Nordstrom’s market cap is currently at $8.70 Billion and valued at $41/share, having lost 7.01% over the last week.

To help you analyse Nordstrom against its competitors press play on the Compar-O-Matic to view the company’s analyst ratings against its competitors. It currently stands at a low “moderate buy.”

As illustrated by the Turbo-Chart, Nordstrom has performed above the S&P500 for nearly all of the past year. 

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